Cape Argus E-dition

July 2021 – Gazing into the abyss

WILLIAM SAUNDERSON-MEYER @TheJaundicedEye Follow WSM on Twitter @ TheJaundicedEye

WITH the turbulent history we have, South Africans are accustomed to periodically gazing into the abyss. And then, contrary to the rational expectations of the rest of the world, the abyss doesn’t gaze implacably back. Instead, it blinks.

We yawn, rub our eyes, and life goes on pretty much as before.

It is remarkable how speedily South Africans’ legendary, some might say foolhardy, state of perpetual optimism has reasserted itself. The commentariat consensus seems to be that some tinkering needs to be done, but it’s not quite as bad as we initially feared.

President Cyril Ramaphosa, after agreeably musing whether this was, indeed, not the moment to add a R200billion straw to the camel’s back, decided instead on a social distress grant that will cost a mere R27bn.

And the National Treasury’s R39bn package of relief measures will not, we are assured, require new borrowings. The relief costs will be funded from an estimated R100bn revenue windfall from the recent commodities boom.

Phew! Isn’t that fortunate?

Instead of the unrest being a knockout punch to an already staggering economy, it appears that South Africa could fund another round of unrest without skipping a budgetary beat. South Africans have again shown an admirable “maak ’n plan” adaptability without waiting for state intervention.

It’s tempting, also, from the many heartwarming accounts that have emerged of ordinary citizens helping one another, across race and class divisions, to believe that we’re unsinkable as a nation. That might be a mistake, but the instinct to remorselessly hunt out a silver lining affects even our economic sages.

Writing in Business Day, Rand Merchant Bank’s chief economist Etienne le Roux points to the country’s “inherent resilience”.

The upside of the destruction is that it will have an economic “kicker” effect, writes Le Roux. Looted businesses that were not destroyed will have to be restocked; those that have been destroyed will have to be rebuilt.

It may well be that Le Roux’s assessment is accurate. There are good reasons, however, to be sceptical, especially given the scale of the upheaval.

To the degree that South African corporates have not already divested, they are essentially captives. There is no alternative but to rebuild.

But it’s not the corporates but individuals to whom we must look for likely trends.

Personal income tax makes up about 40% of our tax revenue, double that of companies. Not only are many of these individuals highly mobile in terms of emigration, but it's highly likely that an existing inclination to move assets offshore will accelerate.

Journalist Alexander Parker writes perceptively in Business Maverick: “The scale of the damage … in time, will be measured not just by what is gone, but also by what is quietly not replaced; by what noiselessly goes elsewhere; by what is new and never begun; and by endeavour and enterprise that set sail from other ports.”

METRO

en-za

2021-07-31T07:00:00.0000000Z

2021-07-31T07:00:00.0000000Z

http://capeargus.pressreader.com/article/281535114029572

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